Guest Blogger

Adviser: Lessons abound as Tesla speeds toward streaming

John Znidarsic is a senior writer at Adcom, an advertising agency in Cleveland.

"And the sign says you've got to have a membership card to get inside."

Twenty-seven years ago, the metal band Tesla covered the song "Signs" for its MTV Unplugged album, Five Man Acoustical Jam. This title was a (relatively uncreative) spin on the Five Man Electrical Band, the Canadians who initially penned the lyrics to the album's fifth track. Fast forward to 2017, and this mildly obscure hair band may have been oddly prophetic. Another Tesla — this time I'm referring to Tesla Motors Inc., the technology company led by a One Man Electrical Brand, Elon Musk — may soon be delivering the same message to competitors like Apple, Amazon and Spotify.

Look out music providers, objects in your mirror may be closer than they appear. Tesla could be speeding into the streaming business.

In late June, Tesla revealed its intent to develop its own proprietary music-streaming service. This unnamed product would come bundled in all Tesla vehicles according to the report from Recode. On the surface, this won't impact most Americans. After all, Tesla fell short of its sales goal — delivering at least 80,000 vehicles — by the end of 2016. They passed 100,000 cars sold this January.

At first blush, some pundits questioned the investment necessary to design and launch a proprietary music-streaming service for a couple hundred thousand vehicles. It's hard not to raise an eyebrow when Spotify claimed at least 50 million paying subscribers while Amazon reported 27 million. But, if there's one thing Musk has proved time and time again, it's that he isn't afraid of the long play. And new members of the Tesla family may be easier to obtain in the next few years.

JOHN FERGUSON/ADCOM

On July 5, Volvo announced that all new cars launched from 2019 onward will be partially or completely battery-powered. In that same story, The Guardian reports that Volvo, "has yet to build a single fully electric car." The company's self-imposed deadline is a mere 24 months away.

France followed suit by announcing that it planned to ban all new petrol and diesel cars by 2040. By the end of July, the United Kingdom became the latest European country to announce a similar move, likewise targeting 2040 as the year its gas-car ban will go into effect.

With this rising global demand for electric vehicles, Tesla appears to have a head start in the electric car arms race. That may be exactly why the streaming business is music to Musk's ears.

Pandora seems to be caught between the net and baseline — a place tennis players refer to as "No Man's Land." They burst onto the streaming scene with an ad-supported listening model. Then, to chase Spotify, Pandora introduced Premium, it's $10-a-month, me-too service, to lukewarm reviews. After a management shakeup, Pandora is reportedly back to the drawing board to figure out how to make the ad-supported model work.

Spotify is clearly the streaming leader. But its financial health is directly correlated to its ability to negotiate better music royalty rates. Unlike Apple or Amazon, there are no other business units that can subsidize these premiums.

Which leads us back to Tesla. If the fledgling auto maker can accelerate its manufacturing to meet this growing demand, its affluent customer base will grow exponentially. The combination of locking its streaming competition out of its vehicles in favor of its proprietary service and growing its base of rabid fans could land a deadly body blow to Apple, Amazon, Pandora and Spotify.

In a recent Business Insider interview, a Tesla spokesperson said, "Our goal is to simply achieve maximum happiness for our customers."

On the surface, this may sound like a squishy platitude from a seasoned PR veteran. But I believe that remark was delivered in earnest. I believe it because since it burst onto the scene in 2003, Tesla has proven that it isn't just a car company. It is a technology company. And often, technology companies forget the real purpose of technological advancement: to make our lives more enjoyable.

Technology should make the complex simple. It should help connect us with people more effectively. It should give us new ways to share ideas and express creativity. Ultimately, the role of technology is to help us reach a different level of happiness. Perhaps, a level that we didn't couldn't collectively conceive five years prior.

When it comes to technological advancement, Tesla is clearly in the driver's seat. The lesson for other technology companies is that Tesla got there by thinking outside of its car.

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